SECOND AMENDMENT TO LEASE
Exhibit 10.12
SECOND AMENDMENT TO LEASE
| I. | PARTIES AND DATE. |
This Second Amendment to Lease (the “Amendment”) dated June 22, 2007, is by and between THE IRVINE COMPANY LLC, a Delaware limited liability company, formerly The Irvine Company, a Delaware corporation (“Landlord”), and PEREGRINE SEMICONDUCTOR CORPORATION, a Delaware corporation (as successor in interest to Continuous Computing Corporation, a Delaware corporation) (“Tenant”).
| II. | RECITALS. |
On April 20, 2000, Landlord and Tenant entered into a lease (“Lease”) for space in a building located at 9380 Carroll Park Drive, San Diego, California (“Premises”).
Landlord and Tenant each desire to modify the Lease to extend the Lease Term, and make such other modifications as are set forth in “III. MODIFICATIONS” next below.
| III. | MODIFICATIONS. |
| A. | Basic Lease Provisions. The Basic Lease provisions are hereby amended as follows: |
| 1. | Item 5 is hereby deleted in its entirety and substituted therefore shall be the following: |
“5. Lease Term: The Term of the Lease commenced on July 1, 2000 and shall expire at midnight, on July 31, 2012”
| 2. | Item 6 is hereby amended by adding the following: |
“Commencing on January 1, 2008, the Basic Rent shall be Sixty-Two Thousand Five Hundred Ninety Dollars ($62,590.00) per month, based on $1.30 per rentable square foot.
Commencing on August 1, 2008, the Basic Rent shall be Sixty-Four Thousand Nine Hundred Ninety-Seven Dollars ($64,997.00) per month, based on $1.35 per rentable square foot.
Commencing on August 1, 2009, the Basic Rent shall be Sixty-Seven Thousand Four Hundred Four Dollars ($67,404.00) per month, based on $1.40 per rentable square foot.
Commencing on August 1, 2010, the Basic Rent shall be Sixty-Nine Thousand Eight Hundred Twelve Dollars ($69,812.00) per month, based on $1.45 per rentable square foot.
Commencing on August 1, 2011, the Basic Rent shall be Seventy-Two Thousand Two Hundred Ninety Dollars ($72,219.00) per month, based on $1.50 per rentable square foot.”
| B. | Waiver of Jury Trial. Section 14.7 of the Lease is hereby deleted in its entirety and substituted therefor shall be the following: |
| “SECTION | 14.7. WAIVER OF JURY TRIAL/JUDICIAL REFERENCE. |
| (a) | LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY, AND, TO THE EXTENT ENFORCEABLE UNDER CALIFORNIA LAW, EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE. FURTHERMORE, THIS WAIVER AND RELEASE OF ALL RIGHTS TO A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND EVERY OTHER PROVISION, COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE. |
| (b) | IN THE EVENT THAT THE JURY WAIVER PROVISIONS OF SECTION 14.7(a) ARE NOT ENFORCEABLE UNDER CALIFORNIA LAW, THEN THE PROVISIONS OF THIS SECTION 14.7(b) SHALL APPLY. IT IS THE DESIRE AND INTENTION OF THE PARTIES TO AGREE UPON A MECHANISM AND PROCEDURE UNDER WHICH CONTROVERSIES AND DISPUTES ARISING OUT OF THIS LEASE OR RELATED TO THE PREMISES WILL BE RESOLVED IN A PROMPT AND EXPEDITIOUS MANNER. ACCORDINGLY, EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR FORCIBLE DETAINER OR WITH RESPECT TO THE PREJUDGMENT REMEDY OF ATTACHMENT, ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER |
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| (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE, SHALL BE HEARD AND RESOLVED BY A REFEREE UNDER THE PROVISIONS OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, SECTIONS 638 -645.1, INCLUSIVE (AS SAME MAY BE AMENDED, OR ANY SUCCESSOR STATUTE(S) THERETO) (THE “REFEREE SECTIONS”). ANY FEE TO INITIATE THE JUDICIAL REFERENCE PROCEEDINGS SHALL BE PAID BY THE PARTY INITIATING SUCH PROCEDURE; PROVIDED HOWEVER, THAT THE COSTS AND FEES, INCLUDING ANY INITIATION FEE, OF SUCH PROCEEDING SHALL ULTIMATELY BE BORNE IN ACCORDANCE WITH SECTION 14.6 ABOVE. THE VENUE OF THE PROCEEDINGS SHALL BE IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. WITHIN TEN (10) DAYS OF RECEIPT BY ANY PARTY OF A WRITTEN REQUEST TO RESOLVE ANY DISPUTE OR CONTROVERSY PURSUANT TO THIS SECTION 14.7(b), THE PARTIES SHALL AGREE UPON A SINGLE REFEREE WHO SHALL TRY ALL ISSUES, WHETHER OF FACT OR LAW, AND REPORT A FINDING AND JUDGMENT ON SUCH ISSUES AS REQUIRED BY THE REFEREE SECTIONS. IF THE PARTIES ARE UNABLE TO AGREE UPON A REFEREE WITHIN SUCH TEN (10) DAY PERIOD, THEN ANY PARTY MAY THEREAFTER FILE A LAWSUIT IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED FOR THE PURPOSE OF APPOINTMENT OF A REFEREE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 AND 640, AS SAME MAY BE AMENDED OF ANY SUCCESSOR STATUTE(S) THERETO. IF THE REFEREE IS APPOINTED BY THE COURT, THE REFEREE SHALL BE A NEUTRAL AND IMPARTIAL RETIRED JUDGE WITH SUBSTANTIAL EXPERIENCE IN THE RELEVANT MATTERS TO BE DETERMINED, FROM JAMS/ENDISPUTE, INC., THE AMERICAN ARBITRATION ASSOCIATION OR SIMILAR MEDIATION/ARBITRATION ENTITY. THE PROPOSED REFEREE MAY BE CHALLENGED BY ANY PARTY FOR ANY OF THE GROUNDS LISTED IN SECTION 641 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, AS SAME MAY BE AMENDED OR ANY SUCCESSOR STATUTE(S) THERETO. THE REFEREE SHALL HAVE THE POWER TO DECIDE ALL ISSUES OF FACT AND LAW AND REPORT HIS OR HER DECISION ON SUCH ISSUES, AND TO ISSUE ALL RECOGNIZED REMEDIES AVAILABLE AT LAW OR IN EQUITY FOR ANY CAUSE OF ACTION THAT IS BEFORE THE REFEREE, INCLUDING AN AWARD OF ATTORNEYS’ FEES AND COSTS IN ACCORDANCE WITH CALIFORNIA LAW. THE REFEREE SHALL NOT, HOWEVER, HAVE THE POWER TO AWARD PUNITIVE DAMAGES, NOR ANY OTHER DAMAGES WHICH ARE NOT PERMITTED BY THE EXPRESS PROVISIONS OF THIS LEASE, AND THE PARTIES HEREBY WAIVE ANY RIGHT TO RECOVER ANY SUCH DAMAGES. THE PARTIES SHALL BE ENTITLED TO CONDUCT ALL DISCOVERY AS PROVIDED IN THE CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE REFEREE SHALL OVERSEE DISCOVERY AND MAY ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE, WITH RIGHTS TO REGULATE DISCOVERY AND TO ISSUE AND ENFORCE SUBPOENAS, PROTECTIVE ORDERS AND OTHER LIMITATIONS ON DISCOVERY AVAILABLE UNDER CALIFORNIA LAW. THE REFERENCE PROCEEDING SHALL BE CONDUCTED IN ACCORDANCE WITH CALIFORNIA LAW (INCLUDING THE RULES OF EVIDENCE), AND IN ALL REGARDS, THE REFEREE SHALL FOLLOW CALIFORNIA LAW APPLICABLE AT THE TIME OF THE REFERENCE PROCEEDING. IN ACCORDANCE WITH SECTION 644 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, THE DECISION OF THE REFEREE UPON THE WHOLE ISSUE MUST STAND AS THE DECISION OF THE COURT, AND UPON THE FILING OF THE STATEMENT OF DECISION WITH THE CLERK OF THE COURT, OR WITH THE JUDGE IF THERE IS NO CLERK, JUDGMENT MAY BE ENTERED THEREON IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE PARTIES SHALL PROMPTLY AND DILIGENTLY COOPERATE WITH ONE ANOTHER AND THE REFEREE, AND SHALL PERFORM SUCH ACTS AS MAY BE NECESSARY TO OBTAIN A PROMPT AND EXPEDITIOUS RESOLUTION OF THE DISPUTE OR CONTROVERSY IN ACCORDANCE WITH THE TERMS OF THIS SECTION 14.7(b). TO THE EXTENT THAT NO PENDING LAWSUIT HAS BEEN FILED TO OBTAIN THE APPOINTMENT OF A REFEREE, ANY PARTY, AFTER THE ISSUANCE OF THE DECISION OF THE REFEREE, MAY APPLY TO THE COURT OF THE COUNTY IN WHICH THE PREMISES ARE LOCATED FOR CONFIRMATION BY THE COURT OF THE DECISION OF THE REFEREE IN THE SAME MANNER AS A PETITION FOR CONFIRMATION OF AN ARBITRATION AWARD PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 1285 ET SEQ. (AS SAME MAY BE AMENDED OR ANY SUCCESSOR STATUTE(S) THERETO).” |
| C. | Broker’s Commission. Article XVIII of the Lease is amended to provide that the parties recognize the following parties as the brokers who negotiated this Amendment, and agree that Landlord shall be responsible for payment of brokerage commissions to such brokers: Irvine Realty Company (“Landlord’s Broker”) and Irving Hughes. (“Tenant’s Broker”). It is understood and agreed that |
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| Landlord’s Broker represents only Landlord in connection with the execution of this Amendment and that Tenant’s Broker represents only Tenant. The warranty and indemnity provisions of Article XVIII of this Lease shall be binding and enforceable against each of the parties in connection with the negotiation of this Amendment. |
| D. | Tenant Improvements. Tenant shall be permitted to construct the Tenant Improvements for the Premises in accordance with the provisions of Exhibit A, Work Letter, attached hereto. |
| E. | Contingency. Tenant understands and agrees that the effectiveness of this Amendment is contingent upon the effectiveness of the Mutual Assignment of Lease Agreement dated March 1, 2007 by and between Tenant and Continuous Computing Corporation, a Delaware corporation (“Continuous”). Tenant further understands and agrees that the Tenant Improvement Work described in Exhibit A shall not commence until Tenant obtains permission from Continuous to perform such work in the Premises. |
| F. | Letter of Credit. Within ten (10) business days of the execution of this Amendment, Tenant shall cause to be delivered to Landlord an amendment, in form and substance reasonably acceptable to Landlord, to Tenant’s existing letter of credit pursuant to Section 4.4 of the Lease increasing the amount thereof to Two Hundred Fifty Thousand Dollars ($250,000.00). Landlord shall authorize reductions to the letter of credit in the amount of Seventy-Five Thousand Dollars ($75,000.00) on December 31st of each year with the first reduction on December 31, 2007; provided that any such reduction shall be conditioned upon (i) Tenant not having been in default under this Lease at any time, (ii) Tenant having a minimum of $8 million in cash or current assets, and (iii) a written request for such reduction having been submitted to Landlord not earlier than thirty (30) days prior to the applicable reduction date. Tenant shall provide Landlord with current audited financial statements evidencing Tenant’s minimum balance. |
| IV. | GENERAL. |
| A. | Effect of Amendments. The Lease shall remain in full force and effect except to the extent that it is modified by this Amendment. |
| B. | Entire Agreement. This Amendment embodies the entire understanding between Landlord and Tenant with respect to the modifications set forth in “III. MODIFICATIONS” above and can be changed only by a writing signed by Landlord and Tenant. |
| C. | Counterparts. If this Amendment is executed in counterparts, each is hereby declared to be an original; all, however, shall constitute but one and the same amendment. In any action or proceeding, any photographic, photostatic, or other copy of this Amendment may be introduced into evidence without foundation. |
| D. | Defined Terms. All words commencing with initial capital letters in this Amendment and defined in the Lease shall have the same meaning in this Amendment as in the Lease, unless they are otherwise defined in this Amendment. |
| E. | Corporate and Partnership Authority. If Tenant is a corporation or partnership, or is comprised of either or both of them, each individual executing this Amendment for the corporation or partnership represents that he or she is duly authorized to execute and deliver this Amendment on behalf of the corporation or partnership and that this Amendment is binding upon the corporation or partnership in accordance with its terms. |
| F. | SDN List. Tenant hereby represents and warrants that neither Tenant nor any officer, director, employee, partner, member or other principal of Tenant (collectively, “Tenant Parties”) is listed as a Specially Designated National and Blocked Person (“SDN”) on the list of such persons and entities issued by the U.S. Treasury Office of Foreign Assets Control (OFAC). In the event Tenant or any Tenant Party is or becomes listed as an SDN, Tenant shall be deemed in breach of this Lease and Landlord shall have the right to terminate this Lease immediately upon written notice to Tenant. |
[CONTINUED ON FOLLOWING PAGE]
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| V. | EXECUTION. |
Landlord and Tenant executed this Amendment on the date as set forth in “I. PARTIES AND DATE.” above.
| LANDLORD: | TENANT: | |||||||
| THE IRVINE COMPANY, LLC, a Delaware limited liability company | PEREGRINE SEMICONDUCTOR, a Delaware corporation | |||||||
| By | /s/ E. Valjean Wheeler | By | /s/ JIM CABLE | |||||
| E. Valjean Wheeler, President | Name | JIM CABLE | ||||||
| Office Properties | Title | CEO, CHAIRMAN | ||||||
| By | /s/ Michael T. Bennett | By | /s/ PHILIP CHAPMAN | |||||
| Michael T. Bennett | Name | PHILIP CHAPMAN | ||||||
| Vice President, Operations Office Properties | Title | CFO | ||||||
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EXHIBIT A
WORK LETTER
DOLLAR ALLOWANCE
[SECOND GENERATION SPACE]
| I. | TENANT IMPROVEMENTS |
The tenant improvement work (“Tenant Improvements”) shall consist of any work required to complete the Premises pursuant to approved plans and specifications. Tenant shall employ its own architect and general contractor in constructing the Tenant Improvements, which shall be subject to Landlord’s prior approval. The general contractor shall be selected and engaged by Tenant on the basis of a competitive bid or competitive negotiation and shall be Burger Construction. The work shall be undertaken and prosecuted in accordance with the following requirements:
| A. | The space plans, construction drawings and specifications for all improvements and finishes, together with any changes thereto, shall be submitted to Landlord (with samples as required) for review and approval by Landlord and its architect for the Project. Landlord may require Tenant, at Tenant’s expense, to remove any Tenant Improvements that, in Landlord’s reasonable judgment, are of a nature that would require removal and repair costs that are materially in excess of the removal and repair costs associated with standard office improvements. Should Landlord approve work that would necessitate any ancillary Building modification or other expenditure by Landlord, then except to the extent of any remaining balance of the “Landlord Contribution” as described below, Tenant shall, in addition to its other obligations herein, promptly fund the cost thereof to Landlord. |
| B. | All construction drawings prepared by Tenant’s architect shall follow Landlord’s CAD standards, which standards shall be provided to Tenant or its architect upon request. |
| C. | Landlord shall, subject to the foregoing, approve or disapprove any submittal of plans or specifications by Tenant within five (5) business days following receipt thereof by Landlord. |
| D. | Tenant shall use the electrical, mechanical, plumbing and fire/life safety engineers and subcontractors designated by Landlord. All other subcontractors shall be subject to Landlord’s reasonable approval. |
| E. | Tenant shall deliver to Landlord a copy of the final application for permit and issued permit for the construction work. |
| F. | Tenant’s general contractor and each of its subcontractors shall comply with Landlord’s requirements as generally imposed on third party contractors, including without limitation all insurance coverage requirements and the obligation to furnish appropriate certificates of insurance to Landlord prior to commencement of construction. |
| G. | A construction schedule shall be provided to Landlord, and updates shall be supplied during the progress of the work. |
| H. | Tenant shall give Landlord ten (10) days prior written notice of the commencement of construction so that Landlord may cause an appropriate notice of non-responsibility to be posted. |
| I. | Landlord’s construction manager may attend weekly job meetings with Tenant and its general contractor for the Project. |
| J. | Upon completion of the work, Tenant shall cause to be provided to Landlord (i) as-built drawings of the Premises signed by Tenant’s architect, (ii) CAD files of the improved space compatible with Landlord’s CAD standards, (iii) a final punchlist signed by Tenant, (iv) final and unconditional lien waivers from all contractors and subcontractors, (v) a duly recorded Notice of Completion of the improvement work, and (vi) a certificate of occupancy for the Premises (collectively, the “Close-out Package”). Should Tenant fail to provide complete CAD files compatible with Landlord’s standards as required herein, Landlord may cause its architect to prepare same and the cost thereof shall be reimbursed to Landlord by Tenant within ten (10) days of invoice therefor. |
| K. | The work shall be prosecuted at all times in accordance with all state, federal and local laws, regulations and ordinances, including without limitation all OSHA and other safety laws. |
| L. | All of the provisions of this Lease shall apply to any activity of Tenant, its agents and contractors, in the Premises prior to the Commencement Date. |
Landlord shall not be liable in any way for any injury, loss or damage which may occur to any work performed by Tenant, nor shall Landlord be responsible for repairing any defective condition therein. In no event shall Tenant’s failure to complete the Tenant Improvements extend the Commencement Date of the Lease.
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| II. | COST OF THE WORK |
| A. | Provided that the final cost estimate for the Tenant Improvements equals at least $962,920.00, Landlord shall provide to Tenant a tenant improvement allowance in the amount of Four Hundred Eighty-One Thousand Four Hundred Sixty Dollars ($481,460.00) (the “Landlord Contribution”), with any excess cost to be borne solely by Tenant. The Landlord Contribution shall also be utilized to fund space planning and other architectural costs (including the reasonable cost charged by Landlord’s architect to review Tenant’s drawings and CAD files), construction costs and plan check and permit fees. It is understood that Landlord shall be entitled to a supervision/administrative fee equal to five percent (5%) of the Landlord Contribution, which fee shall be paid from the Landlord Contribution. If the actual cost of completion of the Tenant Improvements is less than $962,920.00, such savings shall inure to the benefit of Landlord and Tenant shall not be entitled to any credit or payment or to apply the savings toward additional work. |
| B. | Landlord shall fund the Landlord Contribution (less deductions for the above-described supervision fee and charges of Landlord’s architect) in installments as and when costs are incurred and a payment request therefor is submitted by Tenant. Each payment request shall include a copy of all supporting invoices, unconditional progress payment lien waivers (in the form prescribed by the California Civil Code), and pertinent back-up (including copies of Tenant’s payment checks to its contractors and suppliers). Landlord shall fund the payment request within thirty (30) days following receipt of the application and supporting materials; provided that a ten percent (10%) retention shall be held on payments to Tenant until Landlord receives the complete Close-out Package. The remaining balance of the Landlord Contribution shall be funded when Landlord receives the complete Close-out Package. Prior to any payment by Landlord hereunder, Tenant shall provide to Landlord in writing the address to which such payment is to be delivered, together with a complete copy of the construction contract(s) for the Tenant Improvements. |
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