FIFTH AMENDMENT TO LEASE

Exhibit 10.6

FIFTH AMENDMENT TO LEASE

 

This Fifth Amendment to Lease (“Fifth Amendment”) dated for reference purposes only September 15, 2008 is made at San Diego, California, between H. G. FENTON PROPERTY COMPANY, a California corporation [formerly known as H.G. FENTON COMPANY, a California corporation] (“Landlord”), and D3 TECHNOLOGIES, INC., a California corporation (“Tenant”) with reference to the following facts and circumstances:

 

RECITALS:

 

A.           Tenant and Landlord entered into that certain Lease dated March 24, 1997, which was subsequently amended by that certain First Amendment dated April 17, 2000, that certain Second Amendment dated October 16, 2000, that certain Third Amendment dated January 15, 2003, and that certain Fourth Amendment dated February 6, 2006, (hereinafter referred to as the “Lease”). Initially capitalized terms not otherwise defined in this Fifth Amendment shall have the same meanings as in the Lease.

 

B.           Tenant is currently in occupancy of the area known as 4838 Ronson Court, Suites A - L, San Diego, California 92111, for a total of 16,359 rentable square feet (the “Existing Premises”).

 

C.           The parties wish to (i) provide for an increase in the area of the Existing Premises, by adding thereto the area known as 4848 Ronson Court, Suite K, San Diego, California 92111, consisting of approximately 1,407 rsf (the “Expansion Premises”) as depicted on the attached Exhibit A [the entire area of Premises occupied by Tenant shall now contain 17,776 rsf] and (ii) specify the amount of monthly Base Rent to be paid by Tenant for the Existing & Expansion Premises. The parties also wish to make certain other modifications to the Lease.

 

D.           The Lease for the Existing Premises is scheduled to expire on March 31, 2009.

 

E.           The Lease for the Expansion Premises shall be for a period of forty-one (41) full calendar months, and shall expire on March 31, 2012 (the “Expansion Premises Expiration Date”).

 

NOW, THEREFORE, the parties agree that the Lease shall be amended as set forth herein.

 

1.            COMMENCEMENT DATE OF EXPANSION PREMISES . The Commencement Date for the Expansion Premises shall be November 1, 2008 (the “Expansion Premises Commencement Date”) upon which Landlord delivers the Expansion Premises in accordance with the applicable provisions of the Lease. Accordingly, the term “Delivery of the Premises” as used herein shall refer to the Premises known as 4848 Ronson Court, Suite K, San Diego, California 92111. The estimated date for Delivery of the Expansion Premises shall be October 1, 2008.

 

2.            EARLY POSSESSION OF EXPANSION PREMISES . Landlord acknowledges that Tenant may occupy the Expansion Premises prior to the Expansion Premises Commencement Date, to begin the Premises Refurbishment Work described in Section 5 below, and that such occupancy (“Early Possession”) shall be subject to all provisions of the Lease. Tenant shall not be required to pay monthly Base Rent for the Expansion Premises during the Early Possession period however Early Possession will be subject to the following:

 

 

 

 

3.            EXPANSION PREMISES TERM . Landlord leases to Tenant and Tenant hires from Landlord for a term beginning on the Expansion Premises Commencement Date and ending on the Expansion Premises Expiration Date the Expansion Premises on all of the terms and conditions of the Lease; provided, however, that monthly Base Rent for the entire Premises shall be as set forth in Section 3 below.

 

 

4.            MONTHLY BASE RENT .  The following table sets forth the revised schedule of the monthly Base Rent (net of utilities and Operating Expenses) payable for both the Existing Premises and the Expansion Premises:

 

 

5.            CONDITION OF THE PREMISES . Both the Existing Premises and the Expansion Premises have been previously improved in accordance with the applicable provisions of Section 3.3 and Exhibit B of the Lease. Tenant accepts the entire Premises in its current “as is” condition, and acknowledges that Landlord shall not be required to make any additional improvements in or to the Premises. Notwithstanding the foregoing, after the Expansion Premises Commencement Date, and subject to the provisions of this Section, Landlord shall make available to Tenant a credit up to a maximum amount of twenty thousand and 00/100 dollars ($20,000.00) [the Premises Refurbishment Credit”] which may be used by Tenant to refurbish or recondition existing improvements within the Premises [the “Premises Refurbishment Work”]. Any Premises Refurbishment Work shall be made in accordance with the applicable provisions of Section 8.6 of the Lease (Alterations and Additions). Upon completion of the Premises Refurbishment Work, Tenant shall submit to Landlord bona fide invoices evidencing the payment by Tenant for the Premises Refurbishment Work (material, labor, etc.). Within thirty (30) days after receipt of such invoices and any necessary waivers, releases or other documentation required by Landlord, Landlord shall reimburse Tenant, up to the maximum of the Premises Refurbishment Credit, for such cost and expenses incurred by Tenant.  All Premises Refurbishment Work shall be performed by Tenant in a workmanlike manner.  Tenant shall obtain any and all necessary permits (if any) required for the Premises Refurbishment Work.  All Premises Refurbishment Work, including reimbursement of the Premises Refurbishment Credit shall be completed prior to December 31, 2008.

 

6.            OTHER AREA DEPENDANT TERMS . On the Expansion Premises Commencement Date, pursuant to Section 1.12 of the Lease, Tenant’s Share of Excess Operating Expenses shall be 35.99% for Real Property Taxes and Other Operating Expenses.

 

7.            PARKING . As a result of the addition of the Expansion Premises, on the Expansion Premises Commencement Date, Tenant's parking spaces shall be increased to a total of fifty-three (53) parking spaces. All parking shall be on a non-reserved basis.

 

8.            SECURITY DEPOSIT . As a result of the addition of the Expansion Premises, upon Tenant’s execution of this Fifth Amendment, Tenant shall deliver to Landlord the additional amount of $1,660.26 as an increase in the Security Deposit to be held by Landlord in accordance with the provisions of Section 6 of the Lease. The total Security Deposit to be held by Landlord shall be $9,654.21.

 

9.            ADDITION OF GUARANTOR . The parties acknowledge that LMI AEROSPACE, INC., a Missouri corporation shall be added as Guarantor in accordance with the terms and conditions of the Guaranty Agreement attached as Exhibit B to this Fifth Amendment.

 

EXCEPT AS SPECIFICALLY AMENDED HEREIN, all other terms and conditions of the Lease shall remain in full force and effect between the parties hereto.

 

 

 

EXHIBIT B

GUARANTY AGREEMENT

 

 

FOURTH AMENDMENT TO LEASE

 

 

This Fourth Amendment to Lease (“Fourth Amendment”) dated for reference purposes only February 6, 2006 is made at San Diego, California, between H.G. FENTON COMPANY, a California corporation (“Landlord”) and D3 TECHNOLOGIES, INC., a California corporation (“Tenant”) with reference to the following facts and circumstances.

 

RECITALS:

 

A.           Tenant and Landlord entered into that certain Lease dated March 24, 1997, which was subsequently amended by that certain First Amendment dated April 17 2000, that certain Second Amendment dated October 16, 2000 and that certain Third Amendment dated January 15, 2003 (hereinafter referred to as the “Lease”).  Initially capitalized terms not otherwise defined in this Fourth Amendment shall have the same meanings as in the Lease.

 

B.           Tenant is in occupancy of the area known as 4838 Ronson Court, Suite A, San Diego, California 92111, for a total of 12,537 rentable square feet (the “Existing Premises”).

 

C.           The parties wish to (i) provide for an increase in the area of the Existing Premises, by adding thereto the area known as 4838 Ronson Court, Suite L, San Diego, California 92111, consisting of approximately 3,822 rsf (“Expansion Premises”) as depicted on the attached Exhibit A [the entire area of Premises occupied by Tenant shall now contain 16,359 rsf]; (ii) specify the amount of monthly Base Rent to be paid by Tenant for the Existing & Expansion Premises and; (iii) extend the Term by an additional thirty-six (36) months (the “Extended Term’).  The parties also wish to make certain other modifications to the Lease.

 

D.           The Lease for the Existing Premises is scheduled to expire on March 31, 2006 (as extended by the parties). Tenant wishes to extend the Term of the Lease for an additional period of thirty-six (36) full calendar months, to now expire on March 31, 2009 (the “Extended Term”).

 

E.           The Lease for the Expansion Premises shall commence as set forth below and shall also expire on March 31, 2009. 

 

NOW THEREFORE, the parties agree that the Lease shall be amended as set forth herein.

 

1.            COMMENCEMENT DATE OF EXPANSION PREMISES .  The Commencement Date for the Expansion Premises shall be the date upon which Landlord delivers the Expansion Premises in accordance with the applicable provisions of the Lease and the attached Exhibit B.  Accordingly, the term “Delivery of the Premises” as used herein shall refer to the Premises known as 4838 Ronson Court, Suite L, San Diego, California  92111.  The estimated date for Delivery of the Expansion Premises shall be on or about April 1, 2006 (the “Expansion Premises Commencement Date”).

 

2.            EXPANSION PREMISES .  Landlord leases to Tenant and Tenant hires from Landlord for a term beginning on the Expansion Premises Commencement Date and ending on March 31, 2009, the Expansion Premises on all of the terms and conditions of the Lease; provided, however, that monthly Base Rent for the entire Premises shall be as set forth in Paragraph 3 below.

 

     The following table confirms the areas of the Premises:

 

 

3.            MONTHLY BASE RENT .  The following table sets forth the revised schedule of the monthly Base Rent payable for both the Existing Premises and the Expansion Premises:

 

 

4.            IMPROVEMENTS TO THE EXISTING AND EXPANSION PREMISES .  The Premises have been previously improved in accordance with the applicable provisions of Section 3.3 and Exhibit B of the Lease.  Tenant accepts the Premises in its “as is” condition, and acknowledges that Landlord shall not be required to make any additional improvements. Notwithstanding the foregoing, Tenant has requested that Landlord’s contractor, Design Build Tenant Improvements (“Contractor”), install certain improvements within the Premises (“Additional Improvements”) at Landlord’s sole cost and expense as set forth in Exhibit B attached to this Fourth Amendment.  (All improvements shall be performed using Landlord’s Building standard materials, colors and finishes.  Tenant shall be responsible for moving of all trade fixtures, furniture and equipment.)

 

5.            OTHER AREA DEPENDANT TERMS .  On the Expansion Premises Commencement Date, the Expense Stop in Section 1.14 of the Lease shall be changed to Base Year 2006 for the Extended Term, for purposes of calculating Excess Operating Expenses.  Pursuant to Section 1.12 of the Lease, Tenant’s Share of Excess Operating Expenses shall be 33.13% for Real Property Taxes and Other Operating Expenses.

 

6.            PARKING .  As a result of the addition of the Expansion Premises, on the Expansion Premises Commencement Date, Tenant’s parking spaces shall be increased to a total of forty-nine (49) parking spaces.  All parking shall be on a non-reserved basis.

 

7.            SECURITY DEPOSIT .  As a result of the addi6ton of the Expansion Premises, upon Tenant’s execution of this Fourth Amendment, Tenant shall deliver to Landlord the additional amount of $4,753.95 as an increase in the Security Deposit to be held by Landlord in accordance with the provisions of Section 6 of the Lease. The total Security Deposit to be held by Landlord shall be $7,993.95.

 

8.            CONDITIONS PRECEDENT .  The effectiveness of this Fourth Amendment and all rights to Tenant under this Agreement, are contingent upon Landlord executing a Lease with THE SOCIETY FOR COMPUTER SIMULATION, a California corporation for the property located at 4848 Ronson Court, Suite B, San Diego, California 92111.

 

EXCEPT AS SPECIFICALLY AMENDED HEREIN, all other terms and conditions of the Lease shall remain in full force and effect between the parties hereto.

 

 

 

 

THIRD AMENDMENT TO LEASE

 

This Third Amendment to Lease (“Third Amendment”) dated for reference purposes only January 15, 2003 is made at San Diego, California, between H.G. FENTON COMPANY, a California corporation, formerly known as WESTERN SALT COMPANY, (“Landlord”), and D3 Technologies, Inc., a California corporation (“Tenant”) with reference to the following facts and circumstances.

 

RECITALS:

 

A.           Landlord and Tenant entered into that certain Lease dated March 24, 1997, which was subsequently amended by that certain First Amendment to Lease dated April 17, 2000, and that certain Second Amendment to Lease dated October 16, 2000 (collectively, the “Lease”) wherein Landlord leased to Tenant, and Tenant leased from Landlord, approximately 12,537 rentable square feet of space located in Landlord’s Building addressed at 4838 Ronson Court, Suite A, as more particularly described on Exhibit A attached to the Lease (“Premises”).  Initially capitalized terms not otherwise defined in this Third Amendment shall have the same meanings as in the Lease.

 

B.           This Lease expires on March 31, 2003.

 

C.           The parties wish to (i) extend the Term of the Lease for the Premises: (ii) specify the amount of monthly Base Rent to be paid by Tenant for the Premises.  The parties also wish to make certain other modifications to the Lease.

 

NOW, THEREFORE, the parties agree that the Lease shall be amended as set forth herein.

 

1.            EFFECTIVE DATE .  The effective date shall be April 1, 2003 (the “Effective Date”).

 

2.            EXTENSION OF TERM .  The Term of the Lease shall be extended twenty four (24) full calendar months to now expire on March 31, 2005 (the “Extended Term”).

 

3.            MONTHLY BASE RATE .  The following table sets forth the revised schedule of the monthly Base Rent payable for the Premises during the remaining Term:

 

Month of Term	No. of Months	Total Monthly Base Rent
April 1, 2003 – March 31, 2004	12 months	$11,659.41
April 1, 2004 – March 31, 2005	12 months	$11,910.15
April 1, 2005 – March 31, 2006 (Pursuant to Option to Extend)	12 months	$12,286.26

 

4.            OPTION TO EXTEND .  At the expiration of the Extension of Term, Tenant shall have the right to extend the Term for one (1) additional period of one (1) year with Sixty (60) days advanced written notice to Landlord.  The total monthly base rent for this Option to Extend will be $12,286.25.

 

 

6.            CONDITION OF THE PREMISES .  Tenant accepts the Premises in its current “as is” condition.  Landlord shall not be required to make any additional improvements or modifications in or to the Premises, except as set forth below.

 

(a)           The completion of the Additional Improvements by Landlord shall be deemed Landlord’s Work for all purposes of the Lease.

 

(b)           Landlord shall complete Additional Improvements, within thirty (30) days after Lease Commencement Date.  (All improvements shall be performed using Landlord’s Building standard materials, colors and finishes; Tenant shall be responsible for moving of all trade fixtures, furniture and equipment):

 

7.            ADDITIONAL IMPROVEMENTS TO BE COMPLETED BY LANDLORD .

 

 

[SIGNATURE BLOCK ON FOLLOWING PAGE]

 

9.            NO OTHER CHANGES .  Except as specifically amended herein, all other terms and conditions of the Lease shall remain in full force and effect between the parties hereto.

 

 

 

 

SECOND AMENDMENT TO LEASE

 

This Second Amendment to Lease (“Second Amendment”) dated for reference purposes only October 16, 2000 is made at San Diego, California, between H.G. FENTON COMPANY, a California corporation, formerly known as WESTERN SALT COMPANY, (“Landlord”), and D3 Technologies, Inc., a California corporation (“Tenant”) with reference to the following facts and circumstances.

 

RECITALS:

 

A.           Landlord and Tenant entered into that certain Lease dated March 24, 1997, which was subsequently amended by that certain First Amendment to Lease dated April 17, 2000 (collectively, the “Lease”) wherein Landlord leased to Tenant, and Tenant leased from Landlord, approximately 12,537 rentable square feet of space located in Landlord’s Building addressed at 4838 Ronson Court, Suite A, and approximately 4,293 rentable square feet of space located in Landlord’s Building addressed 4858 Ronson Court, Suite D, for a total of approximately 16,830 rentable square feet of space, as more particularly described on Exhibit A attached to the Lease (“Premises”).  Initially capitalized terms not otherwise defined in this Second Amendment shall have the same meanings as in the Lease.

 

B.           In accordance with the provisions of Section 9 contained within the First Amendment, Tenant has exercised the Early Termination Option with regard to that portion of the Premises identified as 4858 Ronson Court, Suite D, thereby reducing the area of Premises by 4,293 rentable square feet.

 

C.           The parties wish to (i) restate the rentable square footage of the Premises as approximately 12,537; and (ii) specify the new amount of monthly Base Rent to be paid by Tenant for the reduced area of Premises.

 

D.           The Lease expires on March 31, 2002.

 

NOW, THEREFORE, the parties agree that the Lease shall be amended as set forth herein.

 

1.            EFFECTIVE DATE .  The effective date shall be December 1, 2000 (the “Effective Date”).

 

2.            MONTHLY BASE RATE .  The following table sets forth the revised schedule of the monthly Base Rent payable for the Premises during the remaining Term:

 

 

3.            OPERATING EXPENSES .  Operating Expenses shall continue to be treated as set forth in Section 26 of the Lease.

 

 

5.            SECURITY DEPOSIT .  There shall be no change in the amount of Tenant’s Security Deposit.

 

6.            NO OTHER CHANGES .  Except as specifically amended herein, all other terms and conditions of the Lease shall remain in full force and effect between the parties hereto.

 

[SIGNATURE BLOCK ON FOLLOWING PAGE]

 

 

 

FIRST AMENDMENT TO LEASE

 

This First Amendment to Lease (“First Amendment”) dated for reference purposes only April 17, 2000 is made at San Diego, California, between WESTERN SALT COMPANY, a California corporation, (“Landlord”), and D3 Technologies, Inc., a California corporation (“Tenant”) with reference to the following facts and circumstances.

 

RECITALS:

 

A.           Landlord and Tenant entered into that certain Lease dated March 24, 1997 (the “Lease”) wherein Landlord leased to Tenant, and Tenant leased from Landlord, approximately 16,480 rentable square feet of space located in Landlord’s Building addressed at 4838 Ronson Court, Suite A, and 4858 Ronson Court, Suite D, as more particularly described on Exhibit A attached to the Lease (“Premises”).  Initially capitalized terms not otherwise defined in this First Amendment shall have the same meanings as in the Lease.

 

B.           The Lease expires on March 31, 2000.

 

C.           The parties wish to (i) extend the Term of the Lease for the Premises; (ii) specify the amount of monthly Base Rent to be paid by tenant for the Premises, (iii) restate the rentable square footage of the Premises as approximately 16,830.  The parties also wish to make certain other modifications to the Lease.

 

NOW, THEREFORE, the parties agree that the Lease shall be amended as set forth herein.

 

1.            EFFECTIVE DATE .  The effective date shall be April 1, 2000 (the “Effective Date”).

 

2.            EXTENSION OF TERM .  The Term of the Lease shall be extended twenty four (24) full calendar months to now expire on March 31, 2002 (the “Extended Term”).

 

3.            MONTHLY BASE RATE .  The following table sets forth the revised schedule of the monthly Base Rent payable for the Premises during the Extended Term:

 

 

 

5.            OPERATING EXPENSES .  Operating Expenses shall continue to be treated as set forth in Section 26.

 

6.            CONDITION OF THE PREMISES .  Tenant accepts the Premises in its current “as is” condition.  Landlord shall not be required to make any additional improvements or modifications in or to the Premises, except as set forth below.

 

(a)           The completion of the Additional Improvements by Landlord shall be deemed Landlord’s Work for all purposes of the Lease.

 

(b)           Landlord shall use its best efforts to complete the Additional Improvements by June 15, 2000 for 4838 Ronson Court, Suite A.  The Additional Improvements for 4858 Ronson Court, Suite D will only be made after the expiration of the Early Termination Option (as such term is defined in Section 9 below) or upon written notification that the Early termination Option would not be exercised.

 

7.            ADDITIONAL IMPROVEMENTS TO BE COMPLETED BY LANDLORD .  Which is defined as follows:

 

 

 

 

8.            ALTERATIONS AND ADDITIONS .  Pursuant to the provisions of Section 8.6 of Lease, Tenant is authorized and shall be required to make improvements (as it’s sole costs and expense) to 4838 Ronson Court pursuant to the G.L. Foster Construction, Inc. proposal attached hereto as Exhibit A.  Said improvements shall be made for the purpose of restoring the Premises to its original and intended configuration.

 

9.            EARLY TERMINATION OPTION .  Tenant shall have a one-time right and option to terminate this Lease for the portion of the Premises identified as 4858 Ronson Court, Suite D (“Early Termination Option”), within the first six (6) months of the Extended term (the “Termination Period”), subject to the following terms and conditions:

 

 

 

 

10.            SECURITY DEPOSIT .  There shall be no increase in the amount of Tenant’s Security Deposit.

 

11.            NO OTHER CHANGES .  Except as specifically amended herein, all other terms and conditions of the Lease shall remain in full force and effect between the parties hereto.

 

 

 

 

 

STANDARD INDUSTRIAL LEASE

(MODIFIED GROSS)

 

Sycamore Grove Business Park

 

WESTERN SALT COMPANY,

 

a California corporation

 

"Landlord"

 

And

 

D3 TECHNOLOGIES, INC.,

 

a California corporation

 

"Tenant"

 

TABLE OF CONTENTS SECTION

 

SECTION	PAGE
1.	BASIC LEASE PROVISIONS	1
2.	DEFINITIONS	2
3.	PREMISES	4
4.	TERM; DELIVERY OF PREMISES	5
5.	RENT	6
6.	SECURITY DEPOSIT	7
7.	USE	7
8.	MAINTENANCE, REPAIRS AND ALTERATIONS	8
9.	TAXES	9
10.	UTILITIES	9
11.	INSURANCE	10
12.	WAIVER AND INDEMNITY	11
13.	DAMAGE AND DESTRUCTION	12
14.	CONDEMNATION	13
15.	ASSIGNMENT AND SUBLETTING	13
16.	DEFAULT BY TENANT; REMEDIES	15
17.	TENANT’S INSOLVENCY	16
18.	DEFAULT BY LANDLORD	17
19.	SUBORDINATION AND ESTOPPEL	18
20.	HAZARDOUS MATERIALS	18
21.	NOTICE	19
22.	OTHER TERMS AND CONDITIONS	19
23.	GENERAL PROVISIONS	21
24.	ADDENDUM	25

 

EXHIBITS

 

A	Site Plan
B	Premises and Improvements to Premises
C	Rules and Regulations
D	Intentionally Omitted
E	Environmental Questionnaire
F	Intentionally Omitted

 

STANDARD INDUSTRIAL LEASE-MODIFIED GROSS

 

 

THIS STANDARD INDUSTRIAL LEASE–MODIFIED GROSS ("Lease") , dated for reference purposes only, March 24, 1997, Is made at San Diego, California, between WESTERN SALT COMPANY, a California corporation (" Landlord "), and D3 TECHNOLOGIES, INC., a California corporation (" Tenant ").

 

1.             BASIC LEASE PROVISIONS . The words and figures set forth in this Section 1 are used as defined terms in this Lease.

 

1.1            Premises : The real property and improvements which are the subject of this Lease.  The Premises shall consist of 16,480 rentable square feet (rsf) comprised of the following areas:

 

 

 

1.2            Building: The Industrial buildings addressed at 4838 and 4858 Ronson Court, San Diego, California.

 

1.3            Project: Those portions of the Business Park addressed at 4828-4858 Ronson Court San Diego, California. The Project, which is depicted on Exhibit A, contains a total rentable area of approximately 49,380 square feet.

 

 

2.            DEFINITIONS . The captions appearing in this Section 2 are used as defined terms in this Lease.

 

2.1            Additional Rent . All sums payable by Tenant hereunder other than Base Rent, including without limitation Tenant's Share of Excess Operating Expenses, late charges, interest on past due amounts, attorneys' fees, and reimbursements to Landlord of sums advanced by Landlord to cure any default or discharge any obligation of Tenant hereunder.

 

2.2            Base Rent . The basic monthly rent payable to Tenant for the use and occupancy of the Premises, in accordance with Section 5 of this Lease.

 

2.3           Intentionally Omitted

 

2.4            Commencement Date . The first day of the Term, as determined in accordance with Section 4.1 below.

 

2.5            Common Areas . All areas and facilities outside the Premises and within the Building and Project that Tenant is permitted to use, as provided and designated by the Landlord from time to time for the general non-exclusive use of Landlord, Tenant and other tenants of the Building and Project and their respective employees, suppliers, shippers, customers, invitees, licensees or other visitors, including without limitation hallways, entryways, common rest rooms on multi-tenant floors, elevators, stairways, common pipes, conduits, wires and appurtenant equipment serving the Premises, parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

 

2.6            Declaration . The recorded Declaration of Covenants, Conditions and Restrictions for the Business Park, as the same may be amended from time to time.

 

2.7            Delivery of the Premises . The date of the inspection and acceptance (or deemed acceptance) of the Premises by Tenant, following Landlord's notice that Landlord's Delivery Work has been substantially completed in accordance with Exhibit B attached hereto.

 

2.8            Hazardous Materials . Any and all materials or substances which have been determined to be nuisance or dangerous, toxic or hazardous or a pollutant or contaminant, including but not limited to any hydrocarbon material, flammable explosives, asbestos, urea formaldehyde, radioactive materials or waste, or other hazardous, toxic, contaminating or polluting materials, substances or wastes, including, without limitation, any `hazardous substances", "hazardous wastes", "hazardous materials" or "toxic substances" under any Hazardous Materials Laws.

 

2.9            Hazardous Materials Laws . All federal, state and local laws, ordinances and regulations, including, but not limited to, the Federal Water Pollution Control Act (33 U.S.C. §1251, at seq.), Resource Conservation & Recovery Act (42 U.S.C. §6901, et seq.), Safe Drinking Water Act (42 U.S.C. §3000f, et seq.), Toxic Substances Control Act (15 U.S.C. §2601, at seq.), the Clean Air Act (42 U.S.C. §7401, at seq.), Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §9601, at seq.), California HEALTH & SAFETY CODE (§25100, at seq., §39000, at seq.), California Safe Drinking Water & Toxic Enforcement Act of 1986 (California HEALTH & SAFETY CODE §25249.5, at seq.), California WATER CODE (§13000, et seq.), and other comparable federal, state or local law, regulation or interpretation thereof, whether currently in force or enacted in the future, together with any licenses, permits, plans or approvals generated pursuant to or as a result of any such law, which regulates or proscribes the use, storage, disposal, cleanup, transportation, release or threatened release into the environment or presence of Hazardous Materials.

 

2.10            Lease Year . A period of twelve consecutive full calendar months. The first Lease Year shall begin on the Commencement Date if the Commencement Date is the first day of a calendar month; otherwise, the first Lease Year shall begin on the first day of the first full calendar month after the month in which the Commencement Date occurs. Each succeeding Lease Year shall begin on the anniversary of the beginning of the first Lease Year. If Tenant should extend the Term pursuant to any extension option granted herein, the first day of the Extension Term shall also be deemed to be the first day of a Lease Year for all purposes of this Lease.

 

2.11            Tenant's Work . The Improvements and other work, if any, to be accomplished by Tenant in accordance with Exhibit B.

 

2.12            Landlord's Delivery Work . All items of Landlord's Work except those which Landlord reasonably cannot complete prior to the Commencement Date, e.g. , Landlord's Work that cannot be performed by Landlord until Tenant (i) provides Landlord with plans and specifications therefor, or (ii) obtains a building permit, or (iii) completes those items of Tenant's Work that are necessarily completed prior to a particular item of Landlord's Work.

 

2.13            Landlord's Work . The improvements and other work, if any, to be accomplished by Landlord in accordance with Exhibit B.

 

2.14            Mortgage . Any mortgage, trust deed or other encumbrance, and all renewals, extensions or replace­ments thereof, now or hereafter imposed by Landlord upon the real property which includes the Premises.

 

2.15            Mortgagee . The holder of a Mortgage.

 

2.16            Operating Expenses . All costs incurred by Landlord, if any, for any of the following:

 

(a)           The operation, repair and maintenance, in neat, clean and good order and condition of (i) the Common Areas of the Project, Including without limitation all parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers, and irrigation systems, common area lighting facilities, and fences and gates; (ii) fire detection in the Project, including sprinkler system maintenance and repair; and (iii) unless allocated directly to Tenant pursuant to Section 8.1(b), the Building's heating, ventilation and air conditioning (" HVAC ") systems.

 

(b)           Trash disposal for the Project, and to the extent any such services are provided, janitorial service, security services, gardening, painting, plumbing, electrical, carpentry, window washing, signage and equipment rental expenses, and any other service to be provided by Landlord that is elsewhere in the Lease stated to be an item of Operating Expenses.

 

(c)           Any deductible portion of an insured loss concerning any of the items or matters described in this Section.

 

(d)           Premiums for any insurance policies maintained by Landlord pursuant to Section 11 below.

 

(e)           Real Property Taxes to be paid by Landlord.

 

(f)           Utilities not separately metered to Tenant or other tenants of the Project.

 

(g)           Independent contractors for services (excluding capital improvements), and compensation (including employment taxes and fringe benefits) of all persons who perform regular and recurring duties connected with day-to-day operation, maintenance and repair of the Project, provided such compensation is commercially reasonable.

 

(h)           Maintenance and repair of roofs, building walls, foundations, and all sewer and water facilities.

 

(i)           A property management fee in the amount of fifteen percent (15%) of the preceding items of Operating Expenses.

 

(j)           Dues and assessments payable to the Business Park's property owners association (if any).

 

(k)           Intentionally Omitted.

 

The inclusion of the improvements, facilities and services set forth in the foregoing definition shall not be deemed Landlord's representation that such improvements or facilities exist, nor shall It impose on Landlord any obligation either to have those improvements or facilities or to provide those services, unless the improvements or facilities already exist in the Project or Landlord already provides the services as of the Commencement Date, or unless Landlord has agreed to do so elsewhere in the Lease.

 

2.17            Real Property Taxes . All general property and improvement taxes and all forms of assessment, special assessment or reassessment, license fee, license tax, business license tax, commercial rental tax, in lieu tax, levy, charge, penalty (to the extent not imposed as a result of Landlord's negligence) or similar imposition, Imposed by any authority having the direct power to tax, including any city, county, state or federal government, or any school, agricultural, lighting, drainage or other improvement or special assessment district thereof, or any agency or public body, as against any legal or equitable interest of Landlord in the Premises and all improvements thereon and thereto as they presently exist or as they may be expanded, developed, constructed or altered from time to time, including but not limited to: (a) any tax on Landlord's rent, right to rent or other income from the Premises or all or any portion of the Project or as against Landlord's business of leasing the Premises, but specifically excluding Landlord's federal, state or city income, franchise, corporate, personal property, stock transfer, revenues, inheritance or estate taxes; (b) any assessments, taxes, fees, levies or charges in addition to, or in substitution, partially or totally, for any assessment, tax, fee, levy or charge previously included within the definition of real property tax before adoption of Proposition 13 by the voters of the State of California in the June 1978 election, it being acknowledged by Tenant and Landlord that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road mainte­nance, refuse removal and for other governmental services that were before Proposition 13 provided without charge to property owners or occupants; and (c) any assessment, tax, fee, levy or charge upon this transaction or any document to which Tenant is a party which is imposed on the creation or transfer of an interest or an estate in the Premises. It is the intention of Tenant and Landlord that all new and increased assessments, taxes, fees, levies and charges, and all similar assessments, taxes, fees, levies and charges be included within the definition of Real Property Taxes for the purposes of this Lease. Real Property Taxes for the first year of the Term shall be calculated as if the Premises and related improvements were fully assessed. If at any time during the Term the laws concerning the methods of real property taxation prevailing at the commencement of the Lease Term are changed so that a tax or excise on rents or any other tax, however described, is levied or assessed against Landlord as a substitution in whole or in part for any real property taxes, then Real Property Taxes shall include, but not be limited to, any such assessment, tax, fee, levy or charge allocable to or measured by the area of the Premises or the rent payable hereunder, including, without limitation, any gross income tax with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof. With respect to any assessments that may be levied against or upon the Premises, the Building or all or any portion of the Project and that under the laws then in force may be evidenced by improvement or other bonds, or may be paid in annual installments, there shall be included within the definition of Real Property Taxes with respect to any tax fiscal year only the amount currently payable on such tax, bond or assessment, including interest, for such tax fiscal year or the current annual installment for such tax fiscal year.

 

3.            PREMISES .

 

3.1            Lease of Premises . In consideration of the rent and covenants set forth below, Landlord hereby leases the Premises to Tenant, and Tenant hires the Premises from Landlord, for the term, at the rental, and upon all of the conditions set forth herein. Except as otherwise provided herein, this Lease is subject to: (ii) all covenants, conditions, restrictions, easements, mortgages, deeds of trust, leases, ground or underlying leases, rights of way, reciprocal easement agreements to which Landlord is a party which affect the Project and all other matters now or hereafter affecting the Project or the Premises; and (ii) all zoning laws, ordinances and building codes now or hereafter affecting the Project or the Premises. In the event Landlord has a leasehold Interest in the Project or the Premises, this Lease shall terminate upon the termination of such leasehold interest whether such termination is voluntary, involuntary, or by operation of law, without liability of Landlord (unless otherwise specifically set forth herein).

 

3.2            Landlord's Reserved Rights . Landlord reserves to itself the absolute rights: (i) to use the roof, exterior walls and area beneath the Premises, and (ii) to install, use, maintain and replace equipment, machinery, pipes, conduits and wiring located within the Premises which serve other parts of the Project, in a manner and in locations that do not unreasonably interfere with Tenant's use of the Premises.

 

3.3            Condition of Premises . Tenant acknowledges that except to the extent expressly set forth in this Lease or in a written addendum or amendment hereto, neither Landlord nor its agents have made (i) any promise to alter, remodel or otherwise improve, or (ii) any representation or warranty with respect to the condition of, the Premises, the Building or any part of the Project or improvements thereon or therein. Tenant's taking possession of the Premises shall be deemed acceptance of the Premises by Tenant, and shall be deemed conclusively to establish that the Premises are in good and satisfactory condition as of the date Tenant takes possession. Subject to the completion of any Landlord's Work, Tenant accepts possession of the Premises in their current, "as is", condition, and acknowledges that it has inspected the Premises before signing this Lease and is fully aware of the condition of the Premises.

 

3.4            Rights in Common Areas . Landlord grants to Tenant and to Tenant's employees, invitees and licensees a non-exclusive license during the Term to use the Common Areas, subject to the terms and conditions of this Lease. Tenant acknowledges that others, including without limitation Landlord and other tenants of the Building and Project, and their respective employees, invitees and visitors, and other persons authorized by Landlord, will also be entitled to use the Common Areas. Without advance notice to Tenant and without any liability to Tenant in any respect, Landlord shall have the right to:

 

 

 

 

 

 

 

4.            TERM: DELIVERY OF PREMISES .

 

4.1            Term . The Term shall be for the number of months set forth at Section 1.4 above, beginning on the Commencement Date and ending on the Expiration Date.

 

4.2           Intentionally Omitted.

 

4.3           Intentionally Omitted.

 

4.4            Memorandum of Commencement Date . Following the Delivery of the Premises, Landlord shall prepare and forward to Tenant two copies of a written Memorandum of Commencement Date, signed by Landlord, confirming the Commencement Date and the date on which the Term will expire. Within ten (10) days after receipt thereof, Tenant shall sign and return one copy of the Memorandum of Commencement Date, indicating either Tenant's agreement with the matters set forth therein or any areas of disagreement. Tenant's failure to return a copy of the Memorandum of Commencement Date within such ten-day period shall be conclusively deemed Tenant's agreement with all matters set forth therein. Any dispute or disagreement on Tenant's part as to the Commencement Date set forth in such memorandum shall, at the election of either party, be submitted to final, binding arbitration in San Diego, California under the Commercial Arbitration Rules of the American Arbitration Association.

 

4.5           Intentionally Omitted.

 

5.            RENT .

 

5.1            General . From and after the Commencement Date, Tenant agrees to pay Landlord, in advance, on the first day of each and every calendar month during the Term, Base Rent and Additional Rent as specified in this Section. Payment of all such rent shall be without offset or demand, shall be in lawful money of the United States of America and shall be made at the address set forth for Landlord herein or at such other place as Landlord may direct.

 

5.2            Base Rent . Base Rent shall initially be in the amount per month set forth in Section 1.7.

 

5.3            Annual Adjustment to Base Rent . Base Rent shall be increased during the Term in accordance with the schedule set forth in Section 1.9.

 

5.4            Excess Operating Expenses . See Section 26 of Addendum to Lease.

 

5.5            Late Charges . Tenant acknowledges that late payment by Tenant to Landlord of Base Rent or Additional Rent due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which is extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Landlord by the terms of any mortgage or deed of trust covering the Premises. Therefore, if any payment of Base Rent or Additional Rent is not paid within five (5) days after the date due, Tenant shall pay to Landlord ten percent (10%) of the amount due or Two Hundred Fifty Dollars ($250.00), whichever is greater. The parties agree that such late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of the late payment by Tenant. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord's other rights and remedies hereunder or at law and shall not be construed as limiting Landlord's remedies in any manner.

 

6.            SECURITY DEPOSIT . Tenant has paid to Landlord, a security deposit in the amount set forth at Section 1.10 (" Security Deposit "). The Security Deposit shall be held by Landlord as security for the faithful performance by Tenant of all of the terms, covenants and conditions of this Lease to be kept and performed by Tenant. If Tenant defaults with respect to any provision of this Lease, including, but not limited to, the provisions relating to the payment of rent, Landlord may (but shall not be required to) use, apply or retain all or any part of the Security Deposit for the payment of any rent or any other sum in default, or for the payment of any other amount which Landlord may spend or become obligated to spend by reason of Tenant's default or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default. If any portion of the Security Deposit is so used or applied, Tenant shall, upon demand therefor, deliver cash to Landlord in an amount sufficient to restore the Security Deposit to its original amount, and Tenant's failure to do so shall be a material breach of this Lease. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest thereon. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit or any balance thereof shall be returned to Tenant (or at Landlord's option, to the last assignee of Tenant's interests hereunder) at the expiration of the Term, provided that Landlord may retain the Security Deposit until such time as any amount due from Tenant under this Lease has been determined and paid in full.

 

7.            USE .

 

7.1            Permitted Use . The Premises shall be used and occupied only for the purposes and activities set forth in Section 1.13 above, and for no other uses or purposes whatsoever. If any governmental license or permit shall be required for the proper and lawful conduct of Tenant's business or other activity carried on in the Premises, or if a failure to procure such a license or permit might or would in any way affect Landlord or the Business Park, then Tenant, at Tenant's expense, shall (i) duly procure and thereafter maintain such license or permit and submit the same for inspection by Landlord, (ii) install and pay for any improvements, changes or alterations in the Premises, required by any governmental authority, as a result of its proposed use of the Premises or its manner of operation, and (iii) at all times, comply with the requirements of each such license or permit. Tenant warrants that it has investigated whether its proposed use of the Premises and its proposed manner of operation will comply with, and Tenant assumes the risk that its proposed use of the Premises and its proposed manner of operation are and will continue to be in compliance with, all applicable land use approvals, laws and regulations, including without limitation all zoning laws regulating the use of and enjoyment of the Premises. Tenant agrees that under no circumstances shall Tenant be released in whole or in part from any of its obligations under this Lease as a result of any governmental authority's disallowing or limiting Tenant's proposed use of the Premises or its manner of operation.

 

7.2            Condition of Premises . Landlord warrants to Tenant, but without regard either to any Tenant's Work or to the use for which Tenant will use the Premises, that as of the date of Delivery of the Premises, the Premises do not violate the Declaration or any other covenants or restrictions of record or any applicable building code, regulation or ordinance in effect on the date of this Lease. In the event it should be determined that this warranty has been violated, then after written notice from Tenant, Landlord shall promptly, at its sole cost and expense, rectify any such violation. In the event Tenant does not give Landlord any such written notice of violation within three (3) months after the Commencement Date, the correction of such violation shall thereafter be Tenant's obligation, to be performed at Tenant's sole cost and expense. The foregoing warranty shall be of no force or effect if, prior to the date of this Lease, Tenant was the owner or occupant of the Premises, in which event Tenant shall correct any such violation, whenever determined to exist, at Tenant's sole cost and expense.

 

7.3            Compliance With Requirements . Subject to Section 7.2 above, Tenant shall, at Tenant's expense, promptly comply with all applicable statutes, ordinances, rules, regulations, applicable covenants and restrictions of record, and requirements of any fire insurance underwriters or rating bureaus, now in effect or which may hereafter come into effect during the Term, whether or not they reflect a change in policy from that now existing, relating in any manner to the Premises and the occupation and use by Tenant of the Premises. Tenant shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance or shall tend to disturb other occupants of the Business Park. Without limiting the generality of the foregoing, Tenant shall, at its sole cost and expense, comply promptly with all Hazardous Materials Laws and with all environmental laws and ordinances applicable to the conduct of Tenant's business, including all air quality and air pollution regulations of the regional air pollution control district. If at any time it reasonably appears to Landlord that Tenant is not fulfilling its obligations under this Section, Landlord may cause to be performed, at Tenant's sole cost, an audit or inspection of the Premises to evaluate Tenant's compliance herewith.

 

7.4            Compliance With Americans With Disabilities Act . Landlord shall ensure that as of the date of this lease, the design and construction of the Building, the Premises and any Common Areas are in compliance with Title III of the Americans With Disabilities Act (" ADA ") and other applicable laws and regulations that relate to access by the disabled or handicapped. Tenant shall be responsible for compliance with the ADA and related statutes with respect to any alterations or improvements to the Premises and the operation of any businesses conducted from the Premises; Landlord shall have no responsibility or liability with respect thereto. In the event of any changes to the ADA or other applicable statutes, or any rules or regulations promulgated pursuant thereto, that become effective after the date of this Lease, Tenant shall be responsible, at its sole expense, for any necessary alterations or improvements to the Premises, and Landlord shall be responsible for any necessary alterations or improvements to the Building or any Common Areas; provided, however, that Landlord's costs and expenses incurred in connection with any such alterations or improvements shall be conclusively deemed to be Operating Expenses, notwithstanding the classification of such costs and expenses as capital items in accordance with generally accepted accounting practice.

 

7.5            Rules and Regulations . Tenant shall at all times comply with the Declaration and with the rules and regulations