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SECOND AMENDMENT TO LEASE

Lease Agreement

SECOND AMENDMENT TO LEASE | Document Parties: OCLARO, INC. | 702/703 INVESTORS, LLC | New Focus, Inc | OCLARO, INC | Original Lease BRE/PCCP Orchard, LLC | PCCP CS III 702/703, LLC | Silicon Valley Properties, LLC You are currently viewing:
This Lease Agreement involves

OCLARO, INC. | 702/703 INVESTORS, LLC | New Focus, Inc | OCLARO, INC | Original Lease BRE/PCCP Orchard, LLC | PCCP CS III 702/703, LLC | Silicon Valley Properties, LLC

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Title: SECOND AMENDMENT TO LEASE
Governing Law: California     Date: 9/9/2011
Industry: Communications Equipment     Sector: Technology

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Exhibit 10.18

SECOND AMENDMENT TO LEASE

This SECOND AMENDMENT TO LEASE (“Second Amendment”) is dated as of November 30, 2010 (“Second Amendment Effective Date”), by and between 702/703 INVESTORS, LLC, a Delaware limited liability company (“Landlord”), and OCLARO, INC., a Delaware corporation (successor-in-interest to New Focus, Inc.) (“Tenant”).

RECITALS

A. Pursuant to that certain Lease dated December 23, 1999, as amended or modified by Addendum No. 1 made a part thereto (“Original Lease”), by and between Silicon Valley Properties, LLC, a Delaware limited liability company (“SVP”) and New Focus, Inc., a Delaware corporation (“New Focus”), SVP leased to New Focus, and New Focus leased from SVP, certain premises, consisting of approximately fifty-one thousand nine hundred eighty-five (51,985) square feet of gross leasable area, the address of which is 2580 Junction Avenue, San Jose, California (“Original Premises”) and more particularly described in the Original Lease. BRE/PCCP Orchard, L.L.C., a Delaware limited liability company (“BRE/PCCP”) succeeded to the interest of SVP Regency in and to the Premises (and the Project, as defined in the Original Lease) and as the “Landlord” under the Original Lease.

B. BRE/PCCP and New Focus entered into a First Amendment to Lease dated as of June 27, 2006 (the “First Amendment”), pursuant to which BRE/PCCP and New Focus amended the Original Lease to, among other things, extend the Lease Term thereof and amend the amount of Base Rent to be paid by New Focus to BRE/PCCP through the balance of the Lease Term, as extended. The Original Lease, as amended by the First Amendment is referred to herein as the “Amended Lease”.

C. Landlord has succeeded to the interest of BRE/PCCP in and to the Premises (and the Project, as defined in the Original Lease) and as the “Landlord” under the Amended Lease. Tenant hereby acknowledges and agrees that Landlord has succeeded to the interest of BRE/PCCP as “Landlord” under the Amended Lease.

D. Tenant has succeeded to the interest of New Focus as “Tenant” under the Amended Lease and has assumed all of New Focus’ obligations under the Amended Lease. Landlord hereby acknowledges and agrees that Tenant has succeeded to the interest of New Focus as Tenant under the Amended Lease.

E. Commencing approximately February 1, 2011, Tenant desires to relocate its premises to a portion of another building located with the Project (as defined in the Original Lease). Landlord and Tenant desire to amend the Amended Lease to set forth the terms and conditions on which Tenant will lease the New Premises (as defined in Section 2 below) and vacate and surrender the Original Premises. Landlord and Tenant also desire to amend the Amended Lease to modify the amount of Base Rent required to be paid by Tenant to Landlord under the Amended Lease, as amended hereby, with respect to the Original Premises during the period of July 1, 2010 through and including the Original Premises Expiration Date (as defined in Section 8 below).

F. Capitalized terms used in this Second Amendment shall have the meaning ascribed to such terms in the Amended Lease unless otherwise defined in this Second Amendment.

 

 


 

NOW, THEREFORE, in consideration of the foregoing recitals and other consideration, the sufficiency of which is hereby acknowledged, the parties hereto amend, modify and supplement the Amended Lease as follows:

1.  Base Monthly Rent . Commencing July 1, 2010 and ending on the Original Premises Expiration Date (as defined in Section 8 below), Section K of the Summary of Basic Lease Terms incorporated in the Original Lease, as amended by the First Amendment, is amended to provide for the Base Monthly Rent with respect to the Original Premises only as follows:

Notwithstanding anything to the contrary contained in the Amended Lease, the Base Monthly Rent for the period from July 1, 2010 through and including the Original Premises Expiration Date (as defined in Section 8 below) shall be $31,191.00. Any Base Monthly Rent paid from July 1, 2010 through the date of the execution of this Second Amendment which is in excess of $31,191.00 shall be credited against payments of Base Monthly Rent next coming due under the Lease until such amounts have been fully credited.

2. Lease of New Premises .

(a) Effective as of the New Premises Commencement Date referred to in Section 4 below, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, certain premises, consisting of approximately fifty-two thousand one hundred sixty-four (52,164) square feet of gross leasable area, as more particularly shown on the floor plan attached hereto as Exhibit A (“New Premises”). The New Premises is located in that certain building, consisting of approximately eighty-three thousand one hundred seventy (83,170) square feet of gross leasable area, having a street address of 2540 and 2560 Junction Avenue, San Jose, California (the “New Building”), and identified as Building B on the site plan attached as Exhibit A to the Original Lease. The New Premises is sometimes referred to as 2560 Junction Avenue, San Jose, California. Prior to the Second Amendment Effective Date, Tenant verified to its satisfaction the actual gross leasable area of the New Premises and the New Building. Landlord and Tenant have agreed to use the square footage numbers set forth in this Second Amendment for the New Premises and the New Building as the basis for calculating New Premises Base Rent (as described in Section 5 below) and the Tenant’s Share (as described in Section 6 below) with respect to Tenant’s lease of the New Premises. The New Premises Base Rent and Additional Rent payable under the Amended Lease, as amended by this Second Amendment, with respect to Tenant’s lease of the New Premises shall not be subject to revision in the event the actual gross leasable area of the New Premises or the New Building as of the New Premises Commencement Date is more or less that the numbers used as the basis for calculation of New Premises Base Rent or Tenant’s Share, except as expressly provided in Section 6 below, and in no event shall Landlord be subject to liability as the result thereof. Except as expressly provided in this Second Amendment or to the extent in conflict with or inconsistent with the terms and conditions of this Second Amendment, the lease of the New Premises shall be subject to all of the terms and conditions contained in the Original Lease.

 

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(b)  Early Entry . Immediately following the full execution of this Second Amendment, Tenant and its approved vendors and/or contractors shall have the right to enter the New Premises (i) to move Tenant’s furniture, furnishings, equipment and inventory in the New Premises, and (ii) to install Tenant’s telephone and telecommunication wiring and cabling in the New Premises (and perform the New Premises TIs, subject to Tenant’s compliance with the terms of the Section 3(i)8.(i) below and the last sentence of Section 3(i)1. below), provided that such entry or performance of work shall not delay the completion of any work required to be performed by Landlord to place the New Premises in the condition required by the first sentence of Section 3(a) below. Any entry into the New Premises by Tenant, its agents, employees, vendors and/or contractors prior to the New Premises Commencement Date shall be at the sole risk of Tenant, and Tenant hereby releases Landlord, its agents, contractors, subcontractors and employees, from any and all liability, cost, damage, lien, action, cause of action, judgment, expense, and claim for injury (including bodily injury, death, or property damage) incurred or suffered by Tenant in or about the New Premises during the performance of any work in the New Premises by Landlord or its contractors or subcontractors prior to the New Premises Commencement Date in order to place the New Premises in the condition required by the first sentence of Section 3(a) below (except to the extent caused by Landlord’s gross negligence or willful misconduct). If Tenant or any of its agents, employees, vendors or contractors enter the New Premises prior to the New Premises Commencement Date as provided above, then such entry shall be upon all the terms and conditions of the Amended Lease, as amended by this Second Amendment (including, without limitation, Tenant’s obligations regarding indemnity and insurance), except that Tenant shall not be obligated to pay New Premises Base Rent prior to the New Premises Commencement Date and shall not be obligated to pay Tenant’s Share of Common Operating Expenses with respect to the New Premises only prior to the New Premises Commencement Date. If Tenant or any of its agents, employees, vendors or contractors intend to enter the New Premises prior to the New Premises Commencement Date, Tenant shall provide (and cause its vendors and contractors to provide) Landlord with insurance certificates evidencing that required insurance is being maintained. The preceding to the contrary notwithstanding, if any work or other activities in the New Premises by Tenant or any of its agents, employees, vendors, contractors or other representatives prior to the New Commencement Date would delay the completion of the work to be performed by Landlord in order to place the New Premises in the condition required by the terms of the first sentence of Section 3(a) below, Tenant shall, upon Landlord’s request, cease, or cause to be ceased, such work or activities, as the case may be, until such time that Tenant may resume its work or activities without so interfering with Landlord’s or its contractors’ or subcontractors’ completion of the work required to be performed by Landlord to place the New Premises in the condition required by the terms of the first sentence of Section 3(a) below.

3. Condition of New Premises .

(a) Within ten (10) days following the full execution of this Second Amendment (the “Target Delivery Date”), Landlord shall deliver the possession of New Premises to Tenant in its “as is, where is” condition, and with all faults, except that Landlord shall cause all building systems serving the New Premises, including, without limitation, the plumbing, electrical, heating, ventilation and air conditioning systems serving the New Premises, to be in good working order and condition as of the date possession of the New Premises is delivered to Tenant. Except with respect to latent defects, by taking possession of the New Premises on the date the

 

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New Premises is actually delivered to Tenant (the “Actual Delivery Date”), Tenant shall be deemed to have accepted the New Premises as being in the condition required by the terms of the immediately preceding sentence and to have accepted the New Premises in its condition existing as of the date Tenant takes possession of the New Premises, subject to all applicable laws, covenants, conditions, restrictions, easements and other matters of public record and the rules and regulations from time to time promulgated by Landlord governing the use of the New Premises. Tenant acknowledges that (a) it has conducted, or had the opportunity to conduct, all investigations, tests and studies concerning the New Premises that Tenant deems appropriate and material to its decision to lease the New Premises, and (b) that it accepts the New Premises in its “as is, where is” condition as of the date Tenant takes possession of the New Premises (subject to latent defects (if any), Landlord satisfying its obligations under the first sentence of this Section 3(a) above and Landlord’s representations contained in this Section 3(a) ). Tenant acknowledges that neither Landlord nor any of Landlord’s agents, employees, contractors, brokers or other representatives has made any representation or warranty as to the suitability of the New Premises for the conduct of Tenant’s business, the condition of the New Premises (except as otherwise provided in the first sentence of this Section 3(a) or elsewhere in this Section 3 ), or the use or occupancy which may be made thereof and Tenant has independently investigated and is satisfied that the New Premises is suitable for Tenant’s intended use and that the New Premises meets all governmental requirements for such intended use. Tenant does hereby waive and disclaim any objection to, cause of action based upon, or claim that its obligations hereunder should be reduced or limited because of the size or condition of the New Premises or the New Building or the suitability of same for Tenant’s purposes, subject to latent defects (if any), Landlord’s express obligations set forth in the first sentence of this Section and Landlord’s representations contained in this Section 3 . Tenant acknowledges and agrees that Landlord shall not be obligated to construct or install any tenant improvements in the New Premises (but Landlord shall be required to undertake such work, if any, as may be required to deliver the New Premises to Tenant in the condition required by the terms of the first sentence of this Section 3(a) ) or to provide Tenant with any tenant improvement allowance with respect to the New Premises except as otherwise provided in Section 3(i) below. In connection with Tenant’s lease of the New Premises, Landlord shall have no obligation to perform any work described in Paragraph 2.2 of the Original Lease or in the Work Letter for Tenant Improvements attached as Exhibit B to the Original Lease, as such Paragraph 2.2 and Exhibit B to the Original Lease shall not apply to Tenant’s lease of the New Premises.

(b) Landlord warrants that, as of the date Landlord delivers possession of the New Premises to Tenant, the New Premises shall be in broom clean and all building systems serving the New Premises shall be in good working order and condition, and the New Premises shall, at Landlord’s sole cost, be separately demised and separately metered for electricity (but not water) (the “Delivery Condition”). If any non-compliance with such warranty set forth in the immediately preceding sentence exists as of the date possession of the New Premises is delivered to Tenant, then Landlord shall, as Tenant’s sole remedy for such non-compliance, promptly after receipt of written notice from Tenant setting forth the nature of such non-compliance, cure or remedy the same at Landlord’s sole cost; provided, however, if Tenant does not give Landlord written notice of such non-compliance with such warranty on or before the date thirty (30) days following the execution of this Second Amendment by Landlord and Tenant, then such warranty shall be deemed to have expired and shall be of no further force or effect.

 

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(c) Landlord further warrants to Tenant that, as of the date of execution of this First Amendment, Landlord has not received any written notice from any governmental entity or agency of any uncured violation of any laws, statutes, ordinances, rules or regulations with respect to the New Premises. If Landlord is in breach or default of the warranty set forth in the immediately preceding sentence, then Landlord shall, as Tenant’s sole remedy for such breach or default, except as otherwise provide in Section 3(f) below, promptly after receipt of written notice from Tenant setting forth the nature of such breach or default, cure or remedy the same at Landlord’s sole cost.

(d) Furthermore, throughout the New Premises Lease Term, Landlord shall, subject to the terms of Paragraph 6.3 of the Original Lease and unless otherwise required by any law, ordinance, rule or regulation, continue to maintain the aesthetic elements of the Project (or such applicable portion of the Project owned by Landlord), such as fountains located thereon, in substantially the same condition as exists as of the Effective Date hereof, ordinary wear and tear, casualty and condemnation excepted.

(e) Tenant’s and its agents’, employees’, vendors’, contractors’ and subcontractors’ use and/or occupancy of the Premises prior to the New Premises Commencement Date shall be upon all the terms and conditions of the Amended Lease, as amended by this Second Amendment (including, without limitation, Tenant’s obligations regarding indemnity and insurance), except that Tenant shall not be obligated to pay New Premises Base Rent prior to the New Premises Commencement Date and shall not be obligated to pay Tenant’s Share of Common Operating Expenses with respect to the New Premises prior to the New Premises Commencement Date.

(f) Notwithstanding anything to the contrary contained herein or in the Amended Lease including, without limitation, Section 5.3 of the Original Lease, if (1) (A) any violation(s) of applicable Law with respect to the New Premises exists as of the Actual Delivery Date, (B) any violation(s) of applicable Law (or code compliance requirement) with respect to the New Premises (excluding therefrom the New Premises TIs and any other alterations, additions or improvements constructed in the New Premises by or on behalf of Tenant) is triggered or caused by the construction of the New Premises TIs and/or any other alterations, additions or improvements constructed in the New Premises by or on behalf of Tenant during the period commencing on the Actual Delivery Date and ending on the date six (6) months following the New Premises Term Commencement Date (the “Compliance Period”) and/or (C) any violation(s) of applicable Law (or code compliance requirement) with respect to the New Premises (excluding therefrom the New Premises TIs and any other alterations, additions or improvements constructed in the New Premises by or on behalf of Tenant) is triggered or caused by Tenant’s application(s) for any permit or governmental approval made during the Compliance Period in connection with the New Premises TIs or any other alterations, additions or improvements to be undertaken by or on behalf of Tenant in the New Premises), and (2) at any time during the period commencing on the date this Second Amendment is fully executed and ending on the expiration of the Compliance Period, any applicable governmental authority or agency (A) requires that such violation be cured or remedied or code compliance work undertaken with respect thereto, (B) will not permit Tenant to occupy any portion of the New Premises until such violation is cured or remedied or code compliance work undertaken with respect thereto or (C) refuses to

 

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issue any permit or governmental approval to Tenant in connection with the construction of the New Premises TIs or any other alterations, additions or improvements to be undertaken by or on behalf of Tenant in the New Premises until such violation is cured or remedied or code compliance work undertaken with respect thereto, then Tenant agrees to perform, or cause to be performed, such work required to cure such violation(s) or compliance work or to allow Tenant to obtain such applicable permit or governmental approval or occupancy of the New Premises as provided above within the time period(s) required by such governmental authority or agency and in a good and workmanlike and lien-free manner and such work shall be subject to the terms and conditions of the Amended Lease, as amended hereby (including, without limitation, Paragraphs 5.2, 5.3 and 5.5 of the Original Lease). The costs incurred by Tenant in performing, or causing to be performed, the work described in the immediately preceding sentence shall be borne as follows: (X) Tenant shall bear the first Eighty-one Thousand Dollars ($81,000) of such costs (“Tenant’s Maximum Contribution”); provided, however, (i) Tenant shall be responsible for 100% of such costs if the improvements, alterations, additions or changes are required due to Tenant’s use of the New Premises not permitted or in a manner not permitted under the Amended Lease, as modified by this Second Amendment, or due to any breach of the Amended Lease, as amended hereby, by Tenant, and (ii) if it is determined that Landlord breached its warranty set forth in Section 3(c) above, then the provisions of the second sentence of Section 3(c) above shall apply except that Landlord shall be responsible for reimbursing Tenant for Tenant’s reasonable costs incurred in remedying or curing Landlord’s breach of such warranty; (Y) except as otherwise provided in clause (i) and (ii) immediately above, to the extent that the costs reasonably incurred by Tenant in performing, or causing to be performed, the work described in the immediately preceding sentence exceed Tenant’s Maximum Contribution, Landlord shall be responsible for one hundred percent (100%) of such excess costs (“Landlord’s Share of Costs”). Landlord shall pay Landlord’s Share of Costs within thirty (30) days after Tenant delivers to Landlord reasonably detailed invoices relating to such costs. If Landlord breaches its obligation to pay Landlord’s Share of Costs when required, Tenant shall have the right to set off such delinquent amount of Landlord’s Share of Costs not paid by Landlord against future payments of New Premises Base Rent and Additional Rent until Tenant is reimbursed such delinquent amount in full. Any alterations, additions or changes to the New Premises made pursuant to this Section 3(f) shall be made only by, or at the direction of, Tenant and subject to the terms of this Section 3(f) .

(g) Without limiting the provisions of Section 3(f) above, the parties hereto also agree that if (1) (A) any violation(s) of applicable Law with respect to the New Premises exists as of the Actual Delivery Date, (B) any violation(s) of applicable Law (or code compliance requirement) with respect to the New Premises (excluding therefrom the New Premises TIs and any other alterations, additions or improvements constructed in the New Premises by or on behalf of Tenant) is triggered or caused by the construction of the New Premises TIs and/or any other alterations, additions or improvements constructed in the New Premises by or on behalf of Tenant during the Compliance Period and/or (C) any violation(s) of applicable Law (or code compliance requirement) with respect to the New Premises (excluding therefrom the New Premises TIs and any other alterations, additions or improvements constructed in the New Premises by or on behalf of Tenant) is triggered or caused by Tenant’s application(s) for any permit or governmental approval made during the Compliance Period in connection with the New Premises TIs or any other alterations, additions or improvements to be undertaken by or on behalf of Tenant in the New Premises), and (2) during the period commencing on the date this Second

 

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Amendment is fully executed and ending on the expiration of the Compliance Period, no applicable governmental authority or agency requires that such violation be cured or remedied or code compliance work undertaken with respect thereto, then Tenant may, but shall not be obligated hereunder to, during the Compliance Period, perform, or cause to be performed, such work required to cure such violation(s) or compliance work in a good and workmanlike and lien-free manner and such work shall be subject to the terms and conditions of the Amended Lease, as amended hereby (including, without limitation, Paragraphs 5.2, 5.3 and 5.5 of the Original Lease). If Tenant elects, in its sole and absolute discretion, to perform, or cause to be performed, during the Compliance Period, any of the work required to cure such violation(s) or code compliance work referred to in the immediately sentence, then the costs reasonably incurred by Tenant in performing, or causing to be performed, such work during the Compliance Period only, shall be borne by Tenant and Landlord in accordance with the cost allocation arrangement described in Section 3(f) above (and the last four sentences of Section 3(f) above shall apply with respect to such cost allocation arrangement, except that, for purposes of this sentence, any references to Section 3(f) in the last sentence of Section 3(f) shall instead be deemed references to this Section 3(g) ).

(h) Notwithstanding the foregoing, if any alterations or other improvements are required to the New Premises by any applicable Law commencing on or after the date that is six (6) months after the New Premises Commencement Date, such costs shall be Tenant’s responsibility as set forth in Section 5.3 of the Original Lease (or, to the extent Section 5.4 of the Original Lease applies, then Tenant shall pay, as Additional Rent, in accordance with the provisions of Section 5.4 of the Original Lease, the amortized cost of such alterations or improvements required to be constructed to comply with any Law).

(i) New Premises Allowance .

1. Landlord shall grant to Tenant an allowance (“New Premises Allowance”) in an amount not to exceed Two Hundred Sixty Thousand Eight Hundred Twenty and 00/100 Dollars ($260,820.00) (which equates to $5.00 per square foot of leasable area of the New Premises) to be used by Tenant, if at all, to pay for the Work Cost (as defined below) incurred by Tenant in constructing or installing general purpose interior leasehold improvements (approved by Landlord and Tenant) in the New Premises (the “New Premises TIs”). For purposes of the immediately preceding sentence, the term “general purpose interior leasehold improvements shall mean and refer to interior improvements which may be of permanent improvement to the New Premises (e.g., permanent partitions; window, wall and floor coverings; lighting and utility fixtures) and shall not mean and include special purpose improvements needed by Tenant for the conduct of its business or which might not be a permanent improvement to the New Premises (e.g., demountable partitions, special security requirements; or trade fixtures, furniture or furnishings of Tenant). Any and all work performed by Tenant in connection with the New Premises TIs shall be treated as Tenant’s Alterations to the New Premises pursuant to Section Paragraph 5.2 of the Original Lease and shall be subject to Landlord’s prior written consent and otherwise performed in accordance with all of the terms and conditions of the Amended Lease, as amended hereby (including, without limitation, Paragraphs 5.2, 5.3 and 5.5 of the Original Lease).

 

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2. If Landlord disburses all or any portion of the New Premises Allowance to Tenant, then (i) such portion of the New Premises Allowance as is disbursed by Landlord to Tenant, together with interest thereon at the annual rate of eight and one-half percent (8.5%) per annum, shall be amortized over the then balance of the New Premises Lease Term and the monthly New Premises Base Rent to be paid by Tenant under the Amended Lease, as amended by this Second Amendment, following the disbursement of such applicable portion of the New Premises Allowance shall be increased by such monthly amortized amount, and (ii) Landlord and Tenant each shall execute an amendment(s) to the Amended Lease, as amended hereby, within ten (10) business days following the date the same is presented to Tenant for execution by Landlord, reflecting the increased New Premises Base Rent resulting from such amortization. Such amendment(s) to the Amended Lease, as amended hereby shall be substantially in the form attached hereto as Exhibit C .

3. If any portion of the New Premises Allowance remains undisbursed after December 31, 2011, then Landlord shall have no liability whatsoever to Tenant for any undisbursed amounts of the New Premises Allowance, Tenant shall not be entitled to any further disbursement of any remaining, undisbursed portion of the New Premises Allowance and Tenant shall not be entitled to any reduction in the amount of the New Premises Base Rent or Additional Rent payable by Tenant under the Amended Lease, as amended by this Second Amendment; provided that if the reason any amounts remain undisbursed is due to Landlord’s failure to disburse when required, Landlord shall remain obligated to disburse such amounts.

4. Landlord shall not be obligated to make any disbursements of the New Premises Allowance to or for the benefit of Tenant unless at the time of each request for disbursement, all of the following conditions are satisfied: (i) such request shall be made not earlier than the New Premises Commencement Date or later than the date that is ten (10) months following the New Premises Commencement Date, and Tenant shall have waived its right to terminate this Second Amendment as provided in Section 4 below (and if Tenant timely exercises its right to terminate this Second Amendment pursuant to Section 4 below, then Landlord shall have no obligation to disburse any portion of the New Premises Allowance to Tenant), (ii) there shall exist no condition, event or act which would constitute an event of default under the Amended Lease, as amended by this Second Amendment, (iii) the Amended Lease, as amended by this Second Amendment, shall be in full force and effect, and (iv) Tenant shall have furnished to Landlord receipts, bills and releases of lien rights (as provided below) covering work done and/or materials furnished in connection with the construction of the New Premises TIs.

5. “Work Cost” means: (i) all design, architectural and engineering fees and consultant fees incurred by Tenant and Landlord in connection with the preparation, review and approval of the architectural plans and specifications related to the New Premises TIs; (ii) governmental agency plan check, permit and other fees; (iii) sales and other taxes; (iv) Title 24 fees; (v) inspection costs; and (vi) the actual costs and charges for material and labor and general contractor’s profit and general overhead incurred by Tenant in connection with the construction of the New Premises TIs.

 

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6. Prior to the commencement of construction or installation of the New Premises TIs, Tenant shall deliver to Landlord an estimate of the total costs of designing and constructing the New Premises TIs and a schedule of values and line item breakdown of such costs. Tenant may request disbursements from the New Premises Allowance not more frequently than once each month after the commencement of construction of the New Premises TIs but Tenant shall not request any such disbursements after the tenth (10 th ) month of the New Premises Lease Term or prior to the New Premises Commencement Date. Each request for disbursement with respect to the design or construction of the New Premises TIs shall be accompanied by: (i) a written request for disbursement itemizing each category of cost for work in place for which payment is requested, in form and content reasonably acceptable to Landlord; (ii) conditional lien releases, in a form and content reasonably satisfactory to Landlord, from all persons and entities providing work or materials covered by such request; (iii) unconditional lien releases from all persons or entities providing work or materials who were paid out of the prior disbursement; and (iv) invoices, vouchers, statements, affidavits and/or other documents in a form reasonably acceptable to Landlord which substantiate and justify the disbursement requested. Within thirty (30) days after Landlord’s receipt of each fully completed disbursement request with respect to the design or construction of the New Premises TIs, Landlord shall pay ninety percent (90%) of the portion of the New Premises Allowance sought to be disbursed (or one hundred percent (100%) of that amount if the Tenant has requested only ninety percent (90%) of the value of the work completed) directly to the Tenant, or, in Landlord’s sole and absolute discretion, to the general contractor and the subcontractors, laborers, or suppliers entitled thereto; provided, however, Landlord reserves the right to reasonably disapprove some or all of the matters disclosed by such disbursement request and to withhold the amounts relating to the disapproved matters from the disbursement if Tenant has not otherwise complied with the requirements set forth in this Section 3(i). The ten percent (10%) remaining after any of the above disbursements shall be paid by Landlord within thirty-five (35) days after all of the following have occurred: (i) Tenant has submitted a final request for disbursement in accordance with the procedure set forth in this paragraph above, (ii) a notice of completion has been duly recorded with respect to the New Premises TIs, and (iii) no lien claim shall have been recorded within the thirty (30) day period following such recordation (or if there be a lien claim, such lien shall have been removed). Landlord shall have no obligation to disburse any amounts from the New Premises Allowance after the date twelve (12) months following the New Premises Commencement Date. Notwithstanding anything to the contrary contained herein, in the event that Landlord breaches its obligation to pay to Tenant any portion of the New Premises Allowance as set forth in this Second Amendment, and such breach continues for a period of more than thirty (30) days following the date Landlord receives written notice of such breach from Tenant, then Tenant shall be permitted to offset any such portion of the New Premises Allowance with respect to which Landlord has breached its obligation to fund against the New Premises Base Rent next coming due until such overdue amounts to which Landlord’s breach applies have been completely offset.

7. Upon completion of the New Premises TIs, Tenant shall: (a) obtain and deliver to Landlord a certificate of occupancy for the New Premises TIs work from the governmental agency having jurisdiction thereof, if applicable; (b) make available to Landlord receipted invoices (or invoices with canceled checks attached) from Tenant’s contractor showing evidence of full payment for such portion of the New Premises TIs work as is shown on such invoices; (c) deliver to Landlord a full set of reproducible as-built drawings for the New Premises TIs work to the extent applicable, including, without limitation, architectural drawings, structural drawings, mechanical drawings, including plumbing, fire sprinkler, electrical and life safety; (d) obtain and deliver to Landlord the building permit or permits for the New Premises TIs work with final sign-off by the City of San Jose; and (e) 


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